Can Restitution in a Criminal Case be Discharged in Bankruptcy?
July 27, 2011 2 Comments
A very common question for folks facing criminal charges involving large amounts of financial loss is whether Court ordered restitution is dischargable in Bankruptcy Court? The answer to this question is that the Bankruptcy Code does not apply to criminal court restitution orders. At least according to the case of People v Washburn (1979) 97 CA3d 621. A restitution obligation imposed as a condition of probation is not dischargeable in a liquidation or “straight bankruptcy” proceeding under Chapter 7 (11 USC §§701 et seq). The courts have held that civil restitution judgment originally imposed as a condition of debtor’s probation not dischargeable under Chapter 7). Nor is a restitution obligation dischargeable under Chapter 13 (11 USC §§1301 et seq). 11
USC §1328(a)(3).Bankruptcy does not block restitution even when defendant’s civil obligations to the victim were discharged by bankruptcy before criminal charges were filed, according to one Santa Clarita Criminal Attorney.
Because collection of restitution is a continuation of a criminal action, the automatic stay provisions of bankruptcy law do not apply therefore a person seeking bankruptcy protection will not be shielded from the payment of such obligations. See In re Gruntz (9th Cir 2000) 202 F3d 1074, 1084–1087 (automatic stay did not enjoin state court criminal proceedings against debtor for failure to pay child support); 11 USC §362(b)(1). Furthermore, in drunk driving cases, the restitution for medical bills when injury is alleged will not be stopped just because a defendant has filed BK, according to a local Santa Clarita DUI Attorney. As it relates to a Victim’s bankruptcy. When the victim incurred an obligation to a third party as a result of defendant’s conduct, the bankruptcy discharge of the victim’s obligation does not preclude a restitution order. People v Dalvito (1997) 56 CA4th 557, 560–562, 65 CR2d 679 (bankruptcy is economic loss despite discharge; no explanation why loss is equal to amount of obligation). Reference CAL Benchguide.